Ladies and gentlemen, welcome to AGC Inc. Life Science Business Briefing. I'll be serving as moderator. I am Tamaki from Corporate Communications and Investor Relations. Because of the infection of COVID-19, we are conducting this briefing on online basis, and we are running the venue with consideration for prevention of infection. In order to make sure that you can hear well, we are not wearing the masks if we are speaking to you, to the audience. Let me introduce the speaker today, Mr. Noriyuki Komuro, General Manager of Life Science General Division of Chemicals Company. Thank you for the introduction. I am Komuro. First, Mr. Komuro will make presentation followed by Q&A. We are scheduled to end this briefing at 6:15 P.M., Japan time. Now, without further ado, over to you, Mr. Komuro. Thank you very much for joining us, despite your busy schedule today for our life science business briefing. Now, without further ado, I'd like to discuss our life science business. This is the agenda today. There are four items to discuss about our business. I'd like to make myself understood as well as possible. First, the positioning of our life science business in our company. This is a chemical segment of our company. You can see the business scale from last fiscal year. On the left top in AGC Group, JPY 1.4 trillion plus in sales. In the blue part, chemicals segment, JPY 450 billion in sales. Of that, life science is about JPY 80 billion approximately in revenue. That was the actual result from last year. As you can see in Life Science, there is small molecule pharmaceuticals and biopharmaceuticals and fine silica. Those are the three major businesses that we have in Life Science. Here, you can see the value chain of our chemical products. Over to the left, you see the electrolysis of raw salt to have chlorine and caustic soda. After that decomposition using chlorine, you have chloromethane and fluorinated chemicals. You replace the chlorine with the fluoride to have various fluorinated resins, as you can see indicated in green. In fluorochemicals business at the right bottom corner, there is a purple part which represents Life Science and small molecule pharmaceuticals and other chemicals, CDMO, Contract Development Manufacturing. In the fluorochemicals businesses, we have originally expanded our business to Life Science. In the small molecule contract development and manufacturing organization, we have also developed our business in biopharmaceuticals and fine silica using our expertise in the small molecule business. This is what I explained earlier, and this shows the history of AGC's life science business. I think I've shown this last year, so some of you may remember this. Originally, as you can see at the top, in 1973, life science team was launched. With regard to commercialization, on the left you see the small molecule business, and on the right, biopharmaceuticals. On the left, the small molecule business, back in 1985, fluorinated intermediates contract manufacturing was started. The business was started in 1985 for small molecule business or synthetic business. Then Wakasa Fine Chemicals was acquired. In 2008, the tafluprost anti-glaucoma drug substance was approved, or drug was approved. We have shifted our focus on these small molecule pharmaceuticals, and this was a trigger. The biggest development was made in 2013. We established a new plant, Kaminaka plant in Wakasa Techno Valley. From Boehringer Ingelheim, we acquired a plant in Spain, 2019. The same year, we increased the production capacity tenfold at Chiba plant. Small molecule business was significantly expanded around these years. The facility that was acquired in Spain was expanded as well. Just the other last month, we spent JPY 10 billion to expand facilities at Kaminaka plant, and that was just announced to the press. On the right, you see the biopharmaceuticals business. In 1973, Life Science Team was established, and ten years later, in 1984, Bio Group was launched. The business was started on a full-scale basis in 2000. At the moment, the Chiba factory is doing this business in Japan, and biopharmaceutical facility was established in 2008. In 2016, Biomeva was acquired. It was a German company, and since then, almost every year, we did major acquisitions or production capacity expansions. Quite rapidly, we are expanding this business. Likewise, in summer this year, July or August, we made this press release from Novartis. The factory that was engaged in the gene therapy or AAV in Longmont was acquired. We have been also focusing on gene therapy as well. Now, looking at the industry or market overall, just briefly, as you can see in this chart, you can see the pharmaceutical, the global market, the chronological changes. The green portion is small molecule pharmaceuticals at the bottom, and the purple one in the middle is the microbial and the mammalian derived biopharmaceuticals or conventional biopharmaceuticals, as we call it. The orange portion is gene and cell therapies, which is at the forefront in this therapeutic area. Like Kymriah, which is well known. It costs you JPY 30 million, JPY 40 million per administration. That was well-reported in the media. That is one of those therapies. At the rightmost hand, you see the CAGR between 2020 and 2026. What we have been working on are those three areas. Small molecule, 6%, and conventional biopharmaceuticals, 8%, and gene and cell therapy is 56%. Those are the growth rate. All three are growing steadily, especially gene and cell therapy is quite promising. A similar chart is here as well. We're just looking at CDMO market alone. As you can see at the right, you see a CAGR between 2020 and 2026. Small molecules, 7%, biopharmaceuticals, 11%, and gene and cell therapies, 30%. Those are the growth rates. Every year, steady high growth is expected going forward for all three areas. High growth rate is expected. Investments have been also proactively made by various companies in this space. Next, let me explain about our strengths. There are three major strengths, as you can see here. The first one is the production network catering to customer needs. We have three regions in Japan, U.S. and Europe, and we have high-level cGMP production offering wide range of services. Basically, the CDMO business is especially advanced in U.S. and Europe, especially for biopharmaceuticals. U.S. and Europe are taking a large share in the market. There are very few players in Japan doing this business. This is the biggest differentiating point for us because we have businesses in all three regions, Japan, U.S. and Europe. Second one is the track record in commercial phase manufacturing. In pharmaceutical manufacturing, clinical trials need to be done. You develop drugs, and you have to test the drugs. During this testing phase, the quality requirement for manufacturing of those that are tested, and also those drugs that are approved and produced for the benefit of patients. If you are producing these for patients in the clinical setting, the quality level required is one level or two levels higher. If you have the actual track record in commercial phase manufacturing, there is a big difference between those that have that record and that do not. Third is technological competence. You have cutting-edge technology to solve manufacturing and development challenges. As I explain later, we have single-use bag. We are one of the first that has adopted this in the CDMO globally. In terms of single-use bag, we have the largest share in the world. Next one. Now, this is what I was talking about when I said we do business in all three regions, Japan, U.S. and Europe. Starting from the biopharmaceuticals, the blue dots represents biopharmaceutical manufacturing locations. Then, on the left, you see the Americas, and Seattle is the leftmost one. Mammalian and microbial business is done here. Then in the middle, there are two plants in Colorado. The left is in Boulder. Mammalian cells, 20,000-liter capacity SUS is used as bioreactors. There are two bioreactors in this plant, as I explain more later. The other one in Colorado is in Longmont. This is the gene therapy and cell therapy viral vector production facility that we press announced about the other day. In Europe, Copenhagen, microbial and mammalian, and in the middle, Heidelberg, microbial business. The other day, we made a press release, plasmid DNA and the messenger RNA, which is quite well known, because of COVID-19 vaccine. Plasmid DNA is the raw material for messenger RNA. CDMO for these is what we also do. In the bottom, the Milan business. Last year, we acquired a gene therapy and cell therapy business here. Then on the left, the blue, the red one is the Malgrat, one hour drive from Barcelona. There is a synthetic pharmaceuticals business plant. Back in 2018, we acquired this plant. Over to the right, that is Japan. Basically, Chiba plant, represented in green, deals with microbial, mammalian and small molecule pharmaceutical and agrochemicals. All these are done. Fukui, the synthetic pharmaceuticals and agrochemicals. As I explained, in Yokohama, there is development work being done. Next is the production network catering to customer needs. As I explained earlier, there are a lot of manufacturing locations around the world. Also, another strength of ours is that as AGC Biologics, at all production locations, the same level GMP service is being offered. Especially when you look at the foreign competitors, even if they buy other companies, they leave the company name as they are, and independently, those businesses still run even after acquisition. In our case, for example, MolMed was acquired in last year, but company name was immediately changed to AGC Biologics. Business management was also integrated into AGC Group. In any locations, you can enjoy the same level of service at the same price. The service is being offered. By depending on the customers, when they would like to get their services, sometimes they are not able to access those services, but we can use the global site so that we are able to meet the customer's needs, using different sites, which locate globally in a different region. Next page, please. This talks about the Boulder site having a 20,000-liter. This explains that. We have single-use bag, there is SUB, which is in the purple. This is a single-use bag. This is the single use. The bag is discarded after the single use. Normally, if the tank is SUS tank, after SUS has been used, it's cleaned, then disinfected, then the tank is being used again. Once manufacturing is done, after the next one manufacturing is going to be done, before that is done, there's a downtime. However, because it is SUS, we can just discard, and we can have a small lot, multiple variable products, manufacturing can be done because of less downtime between each production. On the right-hand side, there's a SUS that is, we do have a 2000 liter or 3000 liter SUS, but we do have 20,000 liter SUS. Compared to 2000, it's 20,000. Of course, that is 10-fold. This is suited for the large-scale projects. If the project becomes larger, then SUS 20,000 liter tank is used. At the same time, if the project size is not so large, then we have a six-pack configuration. That means we connect six 2000 liter bag, and that comes up to 12,000 liters altogether. If the volume is a little bit short for SUS, then we can connect the single-use bag. We can meet the customer's needs for that scale. Basically, we have 2,000-liter single-use bag is the core of the business. However, we can support, of course, 20,000-liter SUS. We purchased it last year, and that is in full operation from this year. We will be able to provide these services for large-scale projects from now on. This talks about our commercial-phase manufacturing track record. Before the commercial manufacturing started, of course, that there's FDA or EMA, and in Japan, PMDA's approval. This inspection is done. That is the pre-manufacturing inspection by each agency. Kobayashi Kako had a problem in the. It has become recent news. This inspection is very stringent, but we received the inspection from these three, the FDA, EMA, and PMDA, and passed the inspection. Now I'd like to talk about track record in commercial phase manufacturing. From year 2019 results to 2021 forecast, the right-hand side is the next year's forecast. Commercial manufacturing is increasing, particularly when it comes to 2022 forecast. Actual commercial and late-stage development altogether will become 90% of our sales. The development stage project, it's a very low success probability when it comes to pharmaceutical product. When it is commercial, the commercial sales will be very stable because it's already approved, and we're able to provide the commercial product to the patient who needs this product every year. In the future, if we have a commercial sales, our ratio increases, that means that our business will be more and more stable. Late-stage development also is important. I'd like to add to that. Early-stage development is in terms of CDMOs, the approval level, of course, that we have to be in compliance with GMP, but a small to medium-sized CDMO can support early-stage development. However, when it comes to late-stage development, particularly for phase III, late-stage development data is going to be submitted as a dossier for the NDA. Therefore, the late-stage development means that, once that drug is being approved, then we will get the commercial order. Having more late-stage development, meaning we will have the future business. Phase III success ratio is about 60% or 70%, I think. Late-stage 60%-70% of late-stage development will become commercial project in the future. I'm talking of the biopharmaceutical. The commercial sales ratio is going to increase in the future to give us more stable business. Now, I would like to talk about technological competence. We have acquired more technologies. However, having said that, in this biopharmaceutical world, technology is evolving day by day. Therefore, we have to always try to get new technologies always. Single-use technology as a CDMO, we are the first one to use that in the world, much earlier than other competitors. As a plasmid DNA, that is the technology that we started to use compared to other competitors. I can talk about this later. There's a Pfizer, actually BioNTech. Pfizer-BioNTech is our customer to manufacture plasmid DNA for vaccine. We expect to launch new technologies earlier than competitors in the future. There's a Seattle microbial and mammalian R&D center on the left-hand side. In middle center, there's a Milan R&D center for gene and cell therapy. Technology is going to be transferred to Colorado, Longmont, from Milan to Longmont. Also in Japan, we are thinking of developing a Japan site also of our businesses. In Yokohama, there are new technologies, applications such as RPA, iPS cells. This is the new technologies that we are thinking of using or developing in Yokohama. This chart talks about COVID-19-related projects. This is the ones that we are allowed to disclose to the public using the newspapers. There are other projects which we're not able to talk about. There are seven COVID-19-related projects which we have contracted. BioNTech, sometimes called BioNTech or BioNTech, which is on the bottom of this slide, and also Novavax, which is the second from the bottom. This is Takeda Pharmaceutical. They signed the contract with the Japanese government for the 150 million times of the injection. This is the adjuvant for Novavax. I'd like to talk about the current situation and also the future situation. This slide talks about what I have talked about using animation. As I said earlier, in Japan, pharmaceuticals and also microbial CDMO was our original business. Biomeva, we acquired in 2016, so we entered the microbial business. Biomeva's messenger, correction, plasmid DNA was already our business at that time. Year 2017, we acquired CMC to acquire the mammalian cell technology. We acquired two sites, Seattle and Copenhagen. After that, in year 2019, a synthetic pharmaceutical the plant in Spain was acquired so that we entered European market. After that, using CMC technology from last year in Chiba plant of Japan, we started providing services of mammalian cell in Japan. MolMed was acquired last year. The viral vector for gene and cell therapy has become our new area last year. After that, we acquired AstraZeneca U.S. plant. 20,000-liter stainless tank was acquired after that. The Spain for synthetic pharmaceutical was expanded. On the right-hand side, MolMed acquisition was done. After that, we expanded the facility. Summer of this year, we acquired a Colorado plant from Novartis, so we were able to do our businesses in the U.S. That is already decided. Messenger RNA will be entered business entry is going to be done in Heidelberg in 2023. Messenger RNA and gene and cell therapy are going to be used, and we're thinking of using this technology to do some businesses in Japan. This is the initiatives. We already talked about Milan, Italy. Currently, gene and cell therapy, there is a very limited number of commercial products. About three of them are the track record of this company which we acquired, and we're trying to transform that business, and we're trying to do that business in the U.S. also. Particularly for gene and cell therapy, plasmid DNA is used. There's a Heidelberg plant manufacturing plasmid DNA, and that will be sent to Milan, Italy, or sent to Longmont, U.S. In the future, we'd like to receive that in Japan so that we can have the end-to-end manufacturing from a plasmid DNA to virus. This plasmid DNA, as I said earlier, is one messenger RNA's raw material, which is on the bottom of left-hand side. Not only plasmid DNA, we would like to expand our services to cover messenger RNA in the future. This slide talks about the small molecule pharmaceuticals and agrochemical area, which is synthetic pharmaceuticals. I'm repeating myself. Like left-hand side is Chiba plant. We expanded the capacity by tenfold. The Spanish capacity will be 1.3 times more. In quarter 2024, the Wakasa plant expansion is going to be done, which is 1.5 times more than our current capacity. Demand is growing 6%-7% year-on-year. The demand growth is steady, and we would like to catch up with that demand by expanding our businesses. Here you can see the cumulative investment amount and sales changes. On the left, you see the Life Science investment in cumulative amount. From 2016 to this year, a total of JPY 200 billion was spent. From next year through 2025, another 2,200 billion or more will be invested to expand the business. Then the corresponding result or the basis of that is that in 2025, we're looking at JPY 200 billion in sales. If we can expand at the pace that we are growing now, it could be moved up by one year so that we can reach JPY 200 billion in 2024. In 2016, Life Science Business Division was established, and JPY 100 billion in 2025 in sales was the original target back then. Since then, compared to where we were, the plan that we originally had has been outpaced in our business expansion. Of course, we are spending more rapidly, and sales have been increasing much more rapidly in accordance with that. Here you can see what I have already explained in one chart. First of all, the small molecule and biopharmaceuticals, top and bottom. JPY 110 billion for this year's forecast that has been announced. The JPY 110 billion can be covered by the investment that we have already made up until 2020. Going forward, in 2023, as we already released, or all the things that I have explained have been already press released, after the company's decision was made to make the investments. In 2024, 2025, we can reach JPY 200 billion in sales with all the investments that we have already announced externally. That's enough to cover that. Then, JPY 200 billion is just an interim point, and we are looking at further growth beyond that. Obviously, small molecule pharmaceuticals and microbial mammalian cells, conventional business, and also M&As at the bottom. What will come after gene and cell therapy, be it iPS cell therapy or whatever. What we don't have right now is something that we're also considering to include in order to make further growth. This is my last slide. This is future technological development modalities. What's written in bold black letters, Gothic letters, are the ones that we have already worked on. Of this existing portion, the productivity improvement technological development is now being done. For example, synthetic biology and AI and DX. All these technologies are also introduced in biopharmaceuticals as well. Productivity improvement can be achieved. Various technologies are there to capture. On the right bottom side, taking advantage of these technologies, there are diseases that can be cured that used to be impossible to be cured. In the right top corner, you see iPS cells and new modalities are shown. In the previous chart, we were just showing years up until 2025. By 2025, we will need to have come up with something new as new businesses. By 2025, we will probably go through other new M&As to enter into new business areas. That is all from me. Thank you very much for your attention. Thank you very much, Mr. Komuro, for your presentation. Now we'd like to start the question and an answer session. When you have a question, please use the QA button and then enter your question in chat. Of course, we can entertain English questions, so you can use both Japanese and English. We do have the questions that we already received, and also we'd like to answer your questions, which you are currently entering using the chat technology. The first question, the byproduct, actually by modality, maybe that is a better word. Could you describe your company's position in the overall CDMO market and your competitors in each key area by product? Could you tell us about your current production capacity and outlook for the production capacity in the midterm plan in light of your company's position in the overall industry? Would you please take a look at the page nine of the presentation? This is something that I briefly touched upon. What we are doing as our business is, our business scope is this three area, particularly product producing what we call a drug substances or API. So filling or fill finish is not something that we do. So these three areas are our business areas. I just want to talk about it. This is by category. So small molecule pharmaceuticals, which is in the bottom. Globally speaking, our share is very small. Probably it's less than 1%. It's not like we have a mega CDMO. Lonza is a large company, but still, their share is maybe only 5%. We have the large number of CDMOs, and we are not really having a big position in the small molecule pharmaceuticals. The chemicals, number five, page number five. In terms of business size, actually we are not trying to be better with our size. We like to use our fluorine technology to give us a competitive edge. China or Indian CDMOs, they have a very large tank, but they are not our competitors. We would like to provide high value-added product to niche markets. In terms of biopharmaceuticals, globally speaking, Lonza is a very famous company for gene and cell, and Boehringer Ingelheim. Historically, these two companies are very strong as a biopharmaceutical CDMO. They are leaders. We, Fujifilm, and I, we are trying to catch up with them. Samsung in South Korea and WuXi in China, also the ones trying to catch up. It's we are ahead of them, though. Apart from Venture, our other competitors, again, there are so many CDMOs in this market. Did I answer your question? I hope so. Thank you. Next question is about current production capacity, single bag, single-use bag and stainless steel. The current production capacity and production capacity forecast in the medium-term management plan. In light of the positioning of AGC in the industry, if you can share that information with us, that would be appreciated. That was the question. Hi. Thank you for the question. Well, please turn to page 20, 14. As explained, in the case of biopharmaceuticals, as I said, the first thing is still 20,000-liter. If you have that, single-use bag is 2,000 liters, so there's tenfold increase in capacity. In biopharmaceutical CDMO major players, if you have many stainless steel 20,000-liter bioreactors, then you are called major players. Lonza, Boehringer Ingelheim that I mentioned, have a capacity of 300,000 or 400,000 liters. Samsung more than 400,000 liters. We have 20,000 times two, meaning 40,000 liters. One order of magnitude smaller for us. Fujifilm, 20,000-liter times six, meaning 120,000. They are planning to increase that by six, as they announced. Fortunately for us, from this year, we have started the operation for these production facilities, and there were more orders that we received than we had expected, so we are hoping to increase the production capacity for this part as well. As for single-use bags, there are so many small players. Honestly speaking, we have not been able to keep track of the capacity that each one has. But as I said, things are not clear in China, but in Japan, U.S. and Europe, among the major CDMO players, we are the largest in terms of capacity. Up until last year, we had shared with you the capacity chart, but we have excluded that this year. I don't remember the exact number, off the cuff, but that's as far as I can say. Thank you. Well, single-use bag and stainless steel tank, which one are you going to focus on in terms of production capacity increase? That was the question as well. Well, the answer is both, I would say, because in both businesses there is demand, and we have to respond to that, and we are going to increase the production capacity in response to the demand increase. Especially for single-use business, we have capacity in Japan, U.S. and Europe. In each of the regions, in accordance with the demand increase in each region, we are going to respond. In the case of SUS, there's only one location that we have, and that's in Colorado. Capacity-wise, we have to depend on Colorado to respond to the whole demand in the world. The production capacity increase? Ahead of the orders of the customers, are you going to make investments or decide to make investments? Or is it the case that you are not going to make decision until you have the commitment from the customers? Well, in terms of the answer, I think the latter is, more or less our approach. I think that would be the right answer. In the case of contract manufacturing, especially for bio, there could be financial crisis, great financial crisis like Lehman Brothers' downfall. The fund, in-flowing into biotechnology could become limited and development could be reduced and, our business, became challenging. Those who are in the biopharmaceutical business for a long time, I think there are several times that they have expressed that. You have to make sure that you have a steady commitment from the customers for the demand, then we can consider increasing the capacity. Maybe the person who asked this question had Samsung, WuXi, and Fujifilm in mind, who were ahead of the curve in terms of increasing the capacity. In our case, rather than increasing the existing production capacity, we are hoping to spend the same amount of money, if we are to spend the money, in capturing new modalities. Next question is about your strengths as AGC. Would you please talk about the competitive situation, CDMOs market? You explained that there are many companies. Would you please explain how your company competes with our competitors in area where you are strong? I would like to understand your strategy for that. Thank you very much for your question. In that sense, would you please take a look at page 13 of my presentation. Compared to competitors, when we try to receive orders from certain pharmaceuticals, what we need to do or what competitors need to provide the same level of services. But still, we need to differentiate ourselves. How do we do that? Because this is the pharmaceutical product, quality has to be assured. There are very stringent limitations, and the rules are very concrete, and there are a lot of bureaucracies. Sometimes, customer's request is going to be very difficult to be met. However, still, what we would like to achieve and what our sales points are, this customer-centric culture of our company. We have a technology and also, the technology importance is going to be more and more, important, to meet customer requirement. We needed to also assure the quality of the product. We have to be in compliance with GMP, and then meet the customer's request, and sometimes we need to be flexible, and we can do that. That is our strength, I think. Of course, there are new technologies that we have, as I explained. However, if the technology is too advanced or too new, then that probably doesn't suit to the pharmaceutical industry, because pharmaceutical industry is very conservative. If the too-new technology is going to be adopted, sometimes that doesn't really help us. Rather, our strength is having a very steady and very robust relationship with our customers. The next question is about 2024 and 2025. After you achieve the sales target of JPY 200 billion, what do you anticipate, then envision your position or your company would be? Would you please tell us about your vision up until maybe 2030? Well, I'd like to talk about biopharmaceutical to answer your question. Currently, the pharmaceutical industry as a whole, the pharmaceutical companies don't primarily manufacture themselves and just use CDMO. I think there is a big trend in the industry. However, for the biopharmaceutical, I think it's only 15% usage of CDMO. The CDMO ratio for the biopharmaceutical is very low. I think, when it comes to synthetic pharmaceuticals, 70%-80% is the ratio. For the fill and finish, maybe close to 100%. CDMO usage for biopharmaceutical, which is too low, that means that we have a huge room for the growth for the biopharmaceutical area. After 2025, up until 2030, or even beyond that, biopharmaceutical CDMOs growth can continue. That's what we think. Samsung, Fujifilm already made a major investment. That is because I believe they have a quite the high conviction to accept the biopharmaceutical the growth. Right now, the pharmaceutical companies are producing or manufacturing biopharmaceutical by themselves because CDMO do not have enough capacity. If we, CDMO, have plenty capacity, the demand will follow. Up until 2013, that was the time that CDMO had a difficult time. Even Lonza was having a difficulty making money. Right now, of course, after COVID-19, from our industry, that is a tailwind. Right now, Samsung was making investment without having any business commitment is growing its their business because of the current situation. Eiji, she thinks that sometimes these are fortunate things happens in terms of the industry, but we don't want to depend on the luck. We would like to use the new modality. Having said that, of course, that new modality is important, but normally, R&D investment is something that we would like to utilize. JPY 200 billion is just the transition point. If we keep up this pace, we can have bigger sales growth, such as JPY 250 billion or even more. If the financial crisis doesn't happen, then pharmaceutical company will continually using CDMO, looking by synthetic pharmaceutical and also fill and finish. The growth will continue until it becomes 60%-70%. After that, the market will saturate. Therefore, biopharmaceutical growth will continue. The sales for this year, JPY 110 billion in forecast, and 2024, 2025, when you reach JPY 200 billion, what will be the sales mix, the by modality or AGC business? What, how do you see that change? The current status versus the sales mix at the time of 2024 or 2025 when you reach JPY 200 billion. Those are the two questions. Well, last year, in this briefing, I said 40%-60%. Small molecule 40% and bio 60%. This year, 30%-70%. And then when we reach JPY 200 billion, probably 20%-80%. Biopharmaceutical will have a greater growth. Of course, we are growing small molecule as well, but biopharmaceutical is expected to grow more. When you reach JPY 200 billion in sales, what do you see the operating margin that you can achieve? Currently, about 20% for this year, probably. That's where we land. Economy of scale is what we can enjoy in this industry as well. As the sales grow, the operating or profitability will also increase. In that sense, we are achieving probably JPY 100 billion. Once we reach JPY 200 billion, what will be the operating margin? Well, if you look at the peer, of course you are all analysts, and you must be looking at the industry peer. Biopharmaceutical operating margin is quite unclear. Samsung and WuXi are the only ones probably who are dedicated to biopharmaceutical CDMO, and they are disclosing the operating margin. Fujifilm and others like Lonza are combining various businesses, so we can't compare ourselves to others. The things are not that clear. According to our assumption, operating profitability is going to be improved by 10 percentage points. Next question is about the COVID-19 related business sales. Would you please tell us the, maybe the scale of the COVID-19 related business sales? I am not able to give you a specific or accurate number, but it's not really small. It's not negligible. The COVID-19 related business sales is quite impactful to some extent. I'm sorry that I've been kind of ambiguous. That means that we are not able to give any specific numbers. Right. In relation to COVID-19, if the FDA approval is delayed or not able to be obtained for the CDMO business for COVID-19 related businesses, how your business is going to be impacted if that happens? Okay, let me take a look at if there's any summary to explain. Page 18, please. In that sense, the third one, Takara Bio, we received this business. However, the clinical trial is not really going well, I heard. Right now, the sales forecast is included. It's not including all of the projects to expect that everything will go well. I think there's another question. We receive the order, and the numbers reflect the customer's commitment. If the conviction is high, then we reflect that in your forecast. If the conviction is not really high, then that is not really reflected in our business forecast. Discussion. The gene therapy development seems to be a bit stalled. Is there any impact on AGC gene therapy business? CDMO business. Well, that perception is not something that I can relate to. More recently, the messenger RNA therapy is now attracting attention and being highlighted. Up until just recently, the using viral vector and gene therapy being pursued, from that sort of approach to messenger RNA use in therapy, that transition is now being witnessed. In terms of pipeline, it doesn't mean that gene therapy items have been reduced by that much. There are much more to come. In terms of exposure, in the mass media, the gene therapy may not have been highlighted that much or as much as they used to. At least, if you look at the number of clinical trials that are underway in the world and the rate of growth, I'm not seeing any rapid or sudden drop in the number of clinical trials that are underway. Thank you. Now, next question is very technical. From Novartis, you have acquired the gene therapy. Does that support all AAV serotypes? Do you think that Zolgensma, this can be manufactured there? Thank you very much for your question. Basically, I don't know if it is reported on a newspaper, Novartis was manufacturing one virus vector product. Therefore, there's only one virus vector which can be produced, which was produced. In terms of facility, even if we produce other virus vector, we don't need new facility, so we can transfer technology from Milan to be able to produce new different types of AAV in the future. This question is just about strengths of MolMed. Can you explain once again what's the strengths of MolMed? The background of this discussion is that CAR T production is possible. That's what I understand. MolMed company has been around for some time, so I'm not sure whether they are technologically capable enough. That's the concern. I'd like to know what the strengths that this company has. Once again, please. With regard to MolMed company, in terms of strengths, the clinical trials and commercial phase manufacturing, I said that there are track records in both. MolMed, more than 20 years ago, the then cutting-edge technologies like CAR T technology were used to drug discovery. That's how this company was started originally. From the early days of gene and cell therapy, they have been fostering and developing their own technologies rather than adopting somebody else's technologies. From the very beginning of gene and cell therapies, they established their own technologies. One of them was approved and was moved up to the commercial phase manufacturing. Before the acquisition, I went to Milan actually, and the strengths that I felt about MolMed was that to various technological challenges, they were trying to solve all these problems on their own. In case of mammalian cells, if there is technological change, a challenge, then they tend to consult with the equipment manufacturers or culture media manufacturers. This company has established a track record as a pioneer in the gene and cell therapy. Because they were at the forefront, and they are most advanced, so they cannot seek any better expertise or insights from others. They were trying to come up with their own answers, and they have the capabilities and to do that. That has been appreciated by the customer, and their business is expanding or deal is expanding. There is the question about investment. To have the customer to have the capacity, do you think that a joint CapEx with your customer is this possible, that a joint customer and AGC CapEx be made? For that, yes, there are projects like that. As I explained earlier, gene and cell therapy area, each company they actually have the contract for the specific area. For example, if I analogize to the hotel, we have a one year contract for one specific hotel room. That's possible. Depending on the customer's project, we have the specific dedicated equipment for that particular customer, where we have a dedicated room to have continuous manufacturing for that particular customer. You're not asking about a joint venture, right? No, I don't think the question is about the joint venture. Or actually, do you have any possibility of having a joint venture with your customer to establish a new production site? No, that is not something that we really expect. Next question. For each modality, is there any difference in profitability or the margin in gene therapy is lower compared to small molecule and mammalian cells? Do you think it would be possible to increase that profitability to the level of small molecule and mammalian cells? The difference in profitability is something that is being asked about. Well, as I said, if you look at the industry as a whole, how does it look? Well, the dedicated CDMO players, if they are specialized in small molecule, or mammalian, gene therapy, then you can compare. Generally speaking, the profitability, the technological level, if it is lower, then the profitability lower. If the growth rate or established technologies and that are growing less, has lower profitability, and those that are newly established technologies that are growing more, has higher profitability, generally speaking. In that sense, as I said, we are trying to capture and invest in new technologies as much as possible because the profitability in new areas are higher and also higher in growth as well. Actually, the price that you have to pay to acquire is also high or becoming higher recently. I have to also consider that. We like to make sure that we can buy something that is worthwhile. Next question is, you are entering global market. The investment or M&A or about the technology that you acquire, is that the Japan Life Science Business unit make a very important business decision? Or do you make a decision using the knowledge and insight of these three different sites, Japan, U.S., and Europe? In principle, we have a collective knowledge and insight of Japan, U.S., and Europe. That is the answer. To be more specific, for the increased capacity, when utilization rate is increasing, then we can expect when we will be ensured in terms of capacity. In terms of decision-making, that is simple. When it comes to new modality, there is a certain risk. Also you have to have a technology evaluation. Of course, that you have evaluation of the company. Of course, that we're not able to make a decision only by Japan side. Seattle is a headquarters for the biopharmaceutical. There are a lot of consultants that we have a contract with or we have industry experts that we listen to. We have a regular contact and meeting about new technology and also what we should do. We have a regular discussion with them to decide the future direction in terms of technology. When it becomes more specific in terms of the possible candidate for the acquisition, then Japan side and Seattle side have a very thorough discussion to move forward. Well, last question. To Mr. Komuro, to you. Within AGC company, the resource allocation to life science business is enough or with more fund to be invested with upfront investments in order to accelerate growth, would that be something that you prefer or necessary? Which one is true? Well, if I can share my personal view, because that was the question that was asked, I guess. As I said, Samsung and Fujifilm are the ones that are investing JPY 100 billion, hundreds of billions of JPY to have capacity in advance. That may be one approach. A 20,000-liter is in a sense, an old technology. It is old technology, so if you are spending the same JPY 200 billion or JPY 300 billion, then it will be much more exciting to invest that money in something new. In Seattle, in CDMO, we were the first to adopt single-use bag. We were the first in adopting the new things. Everyone in our team is more interested in capturing new technologies rather than keep going with something that is existing. That is my personal preference as well. Those who are in the biobusiness is also aligned in that sense. Thank you very much. Well, thank you for asking so many questions. With that, time is up. We'd like to conclude Q&A session. Thank you once again for attending this briefing, despite your busy schedule. We'd like to conclude life science business briefing of AGC. If you close the Zoom session, then you will be transferred to feedback sheet site. So please help us with your input to improve future briefings. If you have further questions, please contact the IR department. Thank you very much for your attendance once again.